The Trickle‐Down Effect of Fintech Development: From the Perspective of Urbanization

18 Pages Posted: 7 May 2020

See all articles by Xun Zhang

Xun Zhang

Beijing Normal University (BNU)

Ying Tan

Beijing Normal University (BNU)

Zonghui Hu

affiliation not provided to SSRN

Chen Wang

Shanghai University of Finance and Economics

Guanghua Wan

Asian Development Bank Institute

Date Written: January–February 2020

Abstract

The emergence of a digital divide or a lack of internet access may hinder urbanization and adversely affect growth. However, fintech development can help to improve the accessibility and affordability of financial services, particularly for sections of the population formerly excluded from such services. Improved access is expected to stimulate the growth essential for promoting urbanization, possibly alleviating the negative impacts of a digital divide and creating a trickle‐down effect. This paper is among the first to investigate the effect of fintech development on urbanization, as indicated by labor transfer from agricultural to non‐agricultural sectors in China. It is found that: (i) the digital divide hindered, while fintech development contributed to urbanization; (ii) the positive effect of fintech development on urbanization affects individuals both with and without access to the internet, yielding the so‐called trickle‐down effect and thus helping to alleviate the negative consequences of a digital divide; and (iii) regarding transmission mechanisms, fintech development helps to generate additional jobs and raise income in non‐agricultural sectors, stimulating urbanization even for those without access to the internet.

Keywords: digital divide, fintech, labor transfer, urbanization

JEL Classification: D14, D31, R58

Suggested Citation

Zhang, Xun and Tan, Ying and Hu, Zonghui and Wang, Chen and Wan, Guanghua, The Trickle‐Down Effect of Fintech Development: From the Perspective of Urbanization (January–February 2020). China & World Economy, Vol. 28, Issue 1, pp. 23-40, 2020, Available at SSRN: https://ssrn.com/abstract=3594715 or http://dx.doi.org/10.1111/cwe.12310

Xun Zhang (Contact Author)

Beijing Normal University (BNU) ( email )

19 Xinjiekou Outer St
Haidian District
Beijing, Beijing 100875
China

Ying Tan

Beijing Normal University (BNU) ( email )

19 Xinjiekou Outer St
Haidian District
Beijing, Guangdong 100875
China

Zonghui Hu

affiliation not provided to SSRN

No Address Available

Chen Wang

Shanghai University of Finance and Economics ( email )

777 Guoding Road
Shanghai, AK Shanghai 200433
China

Guanghua Wan

Asian Development Bank Institute ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1
Abstract Views
100
PlumX Metrics